Investors on edge after slump

Fears of an early end to monetary stimulus in the United States kept investors on edge today following big losses in yesterday’s session.

The FTSE 100 Index failed to recoup any of the 100 point slump, with the top flight 2.3 points lower at 6480.9 in the wake of last night’s 1.5% fall for the Dow Jones Industrial Average on Wall Street.

The sell-off came after encouraging economic data sparked speculation that the US Federal Reserve will accelerate the timetable for an end to American stimulus efforts.

Fixed income interest rates have risen to their highest levels since 2011, fuelling investor fears that this could act as a brake on the recent improvement in economic activity.

And the possibility that interest rates will rise in the UK sooner than the Bank of England’s guidance of 2016 has depressed housebuilding stocks in recent days, although the sector was largely on the front foot today.

Persimmon, which is due to report results next week, was ahead 23p to 1120p, while Barratt Developments lifted 6.3p to 307.5p in the FTSE 250 Index.

Royal Bank of Scotland was the biggest faller in the top flight after Investec cut the cut stock to sell, even though it admitted the bank was still on course for a sustainable recovery. The basis of the downgrade, which left shares fell 4.3p to 336.3p, reflected the broker’s frustration at the pace of the turnaround.